Risks: policy mistake in election year

India’s economic growth is set to grow at 7.2% in 2018-19, supported by improvement in the agriculture and manufactring sectors, Central Statistics Office forecast on Monday.

It would be a tad higher from the 6.7% on the year.

However, given that 2019 is an election year, the risks of a policy mistake are high due to the divergence in economic growth between rural India and the rest of the country, according to insight provider Ashutosh Datar on Smartkarma..

“Agriculture, forestry and fishing” is likely to increase to 3.8% in the current fiscal from 3.4% in the preeding year.

Manufacturing growth is expected to accelerat to 8.3% in this fisal year, up from 5.7% in 2017-18.

India’s Gross Domestic Product (GDP) expanded by 7.1% in 2016-17 and 8.2% in 2015-16.

It is very likely that the next few months will see some monetary easing on one hand due to the relatively benign outlook for headline inflation and fiscal stimulus on the other to prop up the rural economy, said Datar who publishes on Smartkarma.

The Indian economy is in a sweet spot currently. On one hand economic growth is strong and on the other hand, some of the risks have abated due to the sharp fall in Oil prices. Economic growth will thus be strong in 2019 with macro stability. fiinews.com